Supply Chain Madness

What We Can Do in Our Current Economy with the Supply Chain Crisis

Jason has good news. Well, maybe it’s just good news for him, but they were able to in a real rush set up their recording studio over there at the Field Verified offices with Brian Milter. They’re starting to record those really nice videos.

Tomorrow afternoon, it’s been a big push for them. They are wanting to reach more people through those videos. By the way, they work with Nicholas Modig with Construction Excellence and the wonderful people at Lean Communications in Norway to scale lean information and specifically training for construction.

If you’re ever interested in Lean Fundamentals courses, Operational Transformation courses, any of the courses they have in construction for Lean Fundamentals or for the Integrated Production Control System or Takt Planning, please let Jason know.

Why he’s telling you this is that not a lot of free time right now. He just got done probably with three months being on the road, as you know, and it’s been nice to be a little bit back at home, back on his time zone and be setting things up. They’re ready to go but he’s now doing a podcast on the way home but he was like “Dang it! They’re not going to take another podcast from me with the background noise.” But the traffic is so bad that he thinks he can pull this off. So if you hear a bump or something, he is driving but it wasn’t so noisy that he thought it’d be a problem.

Really appreciate all of you. The podcast numbers are through the roof. There’s so many people providing positive feedback and listening to these podcasts. Jason attempts to make them quick, 18 minutes to the point. Here’s the information. Go. Please let him know how he can improve them.

But boy, he tells you what, they’re at around on average like 700, 800, 900, sometimes even a thousand people listening a day to the podcast now. It’s because you are sharing this information and really helping them. Boy, does he appreciate it. You’re fantastic and he loves you.

The Panic Is What Causes Supply Chain Problems

This is what Jason needs everybody to do. He wants everybody to listen to him and glean the right things from this and you leave whatever you don’t want. We are in and entering in a supply chain crisis that literally nobody can do anything about. Jason did a podcast the other day on why it was happening. And it’s true.

The franticness, the panic is what causes these supply chain problems, especially when there’s a ripple. Now when you have COVID-19, there’s going to be a ripple because factories shut down. Then once you see a little bit of scarcity, everybody starts to panic and go mad. We saw that when COVID-19 hit with the supermarkets and toilet paper. It’s not just-in-time deliveries that’s the problem. It’s the panic. It’s the attitude.

Jason’s not even saying that we don’t have to respond to it. If everybody’s panicking, you have to panic too to get out the exit door. If everyone else is panicking with materials, you have to panic too. So he gets it. He’s not condemning you. He just wants to make sure that everybody knows what the actual reason is.

Katie also researches the news, not for Jason but for herself, but she always keeps him up to date. She was like “We are about to enter in a supply chain crisis the likes of which we’ve never seen.” Now for people that are wondering about this, dude, there’s nothing you can do about it. It’s just happening. So the question is, should you go push and kill people on construction projects? No, we need to get better at this and we need to get more transparent with the owner.

It’s going to be hard to get steel. It’s going to be hard to get joists. It’s going to be hard to get metal decking. It’s going to be hard. All the things. But some of those are forced errors and some of those are unforced errors. Meaning some of that is inevitable variation and some of that is not inevitable variation.

This is what Jason would really like to ask the entire industry to do right now as a favor to him and as a favor to you and as a favor to the vendors and as a favor to everybody in construction so that we can level this as much as we possibly can. He’s going to give you some practical advice. This is what we need to do.

If you’re a superintendent, a PM, a senior PM, a project executive, a project director, a field director, general superintendent, owner of a business, whatever, this is our plan. Let’s go ahead and sit down and talk as friends.

Your Submittal Register Is NOT a Procurement Log

We need to implement on a mass scale procurement logs in a very intentional way. Now let Jason be clear about something. Your Procore, Prolog, CMIC, whatever other system you’re using, submittal register systems is not a procurement log. Let him just be clear about that.

You can in your submittal register in those applications put a due date, but for the most part it tracks the project management items only. Here are the categories that Jason cares about. He wants required on job. He wants the material inventory buffer. He wants the actual shipment duration. He wants the fabrication duration. He wants the approvals and queuing duration. He wants to know how long the actual approvals take for all parties, including the designers. He wants to know how long it takes to actually submit that. He wants to know how long it takes to actually design and put together the shop drawings and any of the information that’s actually going to queue up the material release. So that is not a submittal register. What he’s talking to you about is a procurement log.

Those procurement logs, really Jason’s never seen better ones anywhere other than Excel. Somebody would be like “Well you can’t run multiples.” Yes you can. Okay, so calm down. Just calm down. If you want to find a software, if you want to do this in Smartsheet, or if you want to program something, fine. Go do it. He’s just saying in Excel it’s a jamming system. If you want to do something better, great. He loves you. Send it to him and he’ll publish it on the Lean Takt YouTube channel for everybody to see and they’ll praise you. What he’s saying though is people think that because they have a submittal register that everything’s fine. It’s not fine. It’s not fine.

What we have to do, whether you’re using CPM, God forbid, or if you’re using Takt planning, thank God, you need to know your required on job dates for everything. You can have a good schedule put together, Jason’s telling you, in schematic design. You can have a Takt plan, and that’s the genius of the system, have a Takt plan put together in schematic design.

So here we go. If you have that, then all you have to do is piece out all the required materials. Now are you going to track drywall? Maybe, maybe not. Are you going to track screws? No, probably not. Okay, but are you going to track light fixtures? Yes. Are you going to track millwork? Yes. Are you going to track exterior curtain wall? Yes. Are you going to track critical pieces of equipment for mechanical and commissioning? Yes. All of those things need to be distilled down from the specifications and in coordination with the trade partners right away.

90% of Projects Have No Idea What Their Financial Projections Are

If Jason goes to a job, first things he asks: Do we have a Takt plan? Do we have our procurement log? Has somebody gone through these specs? Are we queued up with a 90-day schedule ready to go so that we can mobilize this project? Do we have a financial projection sheet so that we know what kind of deal we’re signing up for at a GMP?

Jason swears to you, as God is his witness, without any irreverence, when he travels around this industry, 90% of the projects, the project managers and the PXs, they have no idea what their financial projections are. They have no idea the status of all of their procurement and they have no project controls. Guys and gals, this is project management 101. We have to have these things.

Jason went to a job that was halfway through. “Where’s your procurement log?” “Yeah, we don’t have one. The trade partners take care of it.” What? “Yeah, where are your financials?” “Oh yeah, we do kind of a project status report every month.” “Well, what about your status of your contingency?” “Oh, we don’t know.” “What about potentials? What about your exposure log?” “We don’t know.” “What about the difference between your lump sum self-perform contract and your overall budget? What’s remaining?” “We don’t know, but we have this sheet that tells us.” “Okay, what does the sheet mean?” “Well, we don’t know how to read it.” What? What are we talking about here?

Okay, so Jason needs that procurement log. You need, we need that procurement log up and running. He doesn’t care if we got to work 12-hour days for a couple weeks and go against this whole team balance and health personal organization system thing, we need to get that done. And he needs all of those required on job dates plugged in from the master schedule. You need that, rather.

The Buffer Column Is the Second Most Important

Once those dates are in there, the second most important column is the buffer. Now you can, in short order, in your fresh eyes meeting especially, identify the increased buffer durations for any of these items. So if you’re like “Oh, just-in-time doesn’t work.” Well, you’re wrong. And then second of all, what you need to do is put your buffer time in there and it will increase the overall planning queue and that will give you the overall correct duration when you should release the materials.

Okay, so that buffer column, if you’re dealing with drywall, maybe drywall’s only increased two weeks. Maybe if it’s underground pipe and structures, maybe it’s increased by eight weeks and you put eight weeks in that buffer time. If you have a problem with exterior curtain wall and that’s a real big problem with glazing for some reason, maybe it’s 12 weeks. Whatever it is, whatever has increased from a needed buffer time duration because of COVID-19, buffer time and quantity amount because of COVID-19, we need to put that in that log.

Then comes, and you don’t just guess on this, you ask the trade partners. This is phone calls. This is phone call 101. How long, sorry if you hear Jason’s turn signal here, how long will it take to actually ship that stuff? Does it come through a port? Do we need a buffer for the port?

One quick sidebar here is that a lot of the supply chain delays are still from the Suez Canal, from the Los Angeles ports being understaffed and boats waiting, and from just delivery companies not being able to ship things and because the prices to ship things by boat have doubled, quadrupled, multiplied by 10 or 20 times the original price. So we have supply chain problems not just from freaking out in panic and batching but also from basically just the supply chain logistics not being able to get it where we need to.

We really need to look at each individual time duration and if it used to be like “Okay, we’re shipping this and it took, let’s just say it came from China and it took 10 weeks.” Well, is that still with the Suez Canal and the Los Angeles ports? Is that still the same case or is it literally going to take 20 weeks? Make sure you have the right delivery duration. Make sure you have the right fabrication duration. Do not be afraid to call those people.

You Can’t Do Everything All at Once

Then you get back to the approvals. Now here’s the thing, when somebody says “Let’s just order everything all at once, send it through all at once, get the submittals done all at once, blah blah blah all at once.” Hey, Jason loves the idea of having it done before construction but you can’t do it all at once. You’re going to overburden the designers. You’re going to make a mistake in reviewing the submittals. We have to have some common sense here.

What you’re going to do is put together your procurement log and let Jason go through these categories one more time. If you need this log he’ll send it to you. But you’re going to have:

• The required on job date
• The material inventory buffer duration
• The delivery duration
• The fabrication duration
• The queuing duration, which is from the time it’s approved to when it actually starts to be fabricated (what is the queuing duration?)
• The approvals including the architect and any other owner and contractor approvals
• The time that it takes to queue that and to design the shop drawings and the submittals

And to get all of that done. So that is the whole system. Jason needs that done for every single submittal with accurate durations and then you’re going to start to see what the earliest ones that should populate are. Best thing to do if you’re using Excel is do conditional formatting. So when the dates populate, meaning you have a column that says the duration and then it calculates the date the next column. Duration date, duration date, duration date. So you’ll have points of release, point of release dates, all through this procurement log throughout the entire system. If you do conditional formatting you can tell the cell to highlight red if the current date is past the targeted date when that point of release should have been happening. That’s really where we are with this.

Build a Realistic Schedule You Can Sell to the Owner

Now when you use that log you’ll have all these cells queuing up red. If this log is done and populated the right way you can actually filter all the items so you know what you should work on first and start working through that at a faster rate than the needed approvals. But it is still leveled. Meaning that you have to work on first things first.

The other thing you can do is if you and your risk analysis and your fresh eyes meeting have identified that certain activities are really high impact because of the dependency the project has upon them or the level of risk, you can highlight the description of those in red and show that to the owner.

Now here’s where it becomes remarkable. If you’ve gotten all the best data, that procurement log will help you build a realistic schedule that you can sell to the owner. It will help you to build a realistic schedule in preconstruction. It will tell you when you can realistically start and so you have data for the owner but you also have a baseline.

So now that you have a baseline, now every week instead of just being like “Mr. and Mrs. Owner, yeah the trade called me and said it’s going to be 14 weeks late blah blah blah we’re behind schedule” and the owner’s like “What?” Instead of doing that and asking them to just blindly trust you, which they shouldn’t because if you don’t have a procurement log you have no idea what the original target was anyway, but really if you have a baseline then you can talk to the owner and say “Hey, we all went through this, we did the research, we knew what the supply chains were doing at the time but it’s fluctuated. So now when I change this buffer duration or the delivery duration or the fabrication duration from 14 weeks to 16, not only do you have an Excel template that tracks these things, proves that we went from the best knowledge and that it changed, but also it’s visible to the owner so they know what’s going on.”

So then you can tell them “All right, these are our options. We can split it out in a cruise. We can expedite. We can change materials.” Whatever. But in the OAC meeting instead of “Oh everything’s going okay, I’ll just absorb the impacts, we have no idea where we are with materials and blah blah blah,” instead of doing that be like you’re going through every list. Here’s what we’re dealing with procurement this week. Here’s where we’re dealing with procurement next week. And you decide and work through it as a team and you do not absorb things blindly together.

No problem with procurement belongs to you alone. It belongs to the entire team. So that’s the case. Now you’re going to get rid of for the most part the unforced errors, the not inevitable variation, so that all that’s left is the forced errors and the inevitable variation, the things that were going to happen no matter what that you have zero control over.

But how much better will the owner look upon you if you have reduced and removed the not inevitable problems, the things that you can control, that you could see, that you could plan, that you could level? Jason cautions you to not just rubber stamp the submittals and throw it out because you’re in a rush. What good is the materials that come at the end of a long supply chain if they come out wrong and you can’t use them anyway? We have to have common sense with this.

This Is Emergency Status: Four Things We Need to Do

These are the things that we need to do. Please, every job, everybody, every contractor, everybody in the United States, we need you right now to have a procurement log on every project up and running. This is emergency status. It’s not “Oh that was a good podcast, I’m going to share it with somebody.” No. It’s sit in your room with leadership and find a scalable method where you can ensure that in two weeks every project has those as tools and that you’ve provided supplemental training and that it is a condition of employment. That is what we absolutely need to do.

The other thing is we have to start weekly procurement reviews with the entire project team that reviews every single item, every single aspect of procurement as it relates to the project. That’s item number two.

Item number three, we need to have 15-minute project manager with the rest of the team, with the superintendent, project management, basically 15-minute daily team standing huddles that are talking about these things and removing roadblocks on a daily basis and aligning procurement as one of the top priorities.

The only other things that you can do is to make sure that in your quality process and your submittal reviews that you install it right the first time. You cannot start pushing and releasing materials that you’re not sure is coordinated and right and let it show up at the last minute wrong and then be in a world of mess. You have to give yourself that little bit of time to review it. You have to swarm when you need to swarm and you have to still level even if the queuing dates will be early.

Now the last thing that Jason’s going to ask everybody to do, because there’s still a bunch more to this procurement system but he wants to give you the bare minimum, is that we have to 100%, 1 million thousand billion percent, we have to get these schedules and procurement logs done as soon as possible, no later than schematic design.

If you think Jason’s crazy, watch this. You will not get your elevator. You will not get your glass. You will not get your tile. You will not get these long lead items unless you know whether or not you have to release those early with design-build or design-assist trade partners early on. If you don’t have a schedule with that procurement log at least high level early on, then you have no idea which trade partners you have to bring on early in preconstruction to actually make the schedule. That’s item number four.

Let’s see if Jason can remember these because he is driving. He’s driving safely but:

One: He needs a procurement log on every project.

Two: He needs a weekly procurement meeting with the entire project management team every project.

Three: He needs every day the teams working in a 15-minute standup huddle removing roadblocks from the field where procurement is a major issue, major item, major topic that we’re covering.

And then finally, four: He needs the Takt plan and the procurement log set up no later than the end of schematic design so that we can figure out our strategy in preconstruction and set up the rest of the job for success.

Jason hopes this podcast has been really helpful because man is it so important, or woman is it so important, like it’s just a big deal. We have to get ahead of this because we’re about to see, we think it’s bad now, we’re about to see a supply chain crisis the likes of which we haven’t even thought of before. If your project needs superintendent coaching, project support, or leadership development, Elevate Construction can help your field teams stabilize, schedule, and flow.

FAQ

Q: Is my submittal register the same as a procurement log?

No. Your Procore, Prolog, CMIC, whatever other system you’re using, submittal register systems is not a procurement log. You can in your submittal register in those applications put a due date, but for the most part it tracks the project management items only. What you need is: required on job date, material inventory buffer duration, delivery duration, fabrication duration, queuing duration (from the time it’s approved to when it actually starts to be fabricated), approvals including the architect and any other owner and contractor approvals, and the time that it takes to queue that and to design the shop drawings and the submittals. That is not a submittal register. That’s a procurement log.

Q: What are the categories I need in my procurement log?

Required on job date, material inventory buffer duration, delivery duration, fabrication duration, queuing duration (which is from the time it’s approved to when it actually starts to be fabricated), approvals including the architect and any other owner and contractor approvals, and the time that it takes to queue that and to design the shop drawings and the submittals. You need that done for every single submittal with accurate durations. Best thing to do if you’re using Excel is do conditional formatting so the cell highlights red if the current date is past the targeted date when that point of release should have been happening.

Q: Why do 90% of projects have no idea where they are?

When Jason travels around this industry, 90% of the projects, the project managers and the PXs, they have no idea what their financial projections are. They have no idea the status of all of their procurement and they have no project controls. He went to a job that was halfway through. “Where’s your procurement log?” “We don’t have one. The trade partners take care of it.” “Where are your financials?” “We do kind of a project status report every month.” “What about your status of your contingency?” “We don’t know.” “What about potentials? Your exposure log?” “We don’t know.” This is project management 101. We have to have these things.

Q: How does a procurement log help me build a realistic schedule?

If you’ve gotten all the best data, that procurement log will help you build a realistic schedule that you can sell to the owner. It will help you build a realistic schedule in preconstruction. It will tell you when you can realistically start and so you have data for the owner but you also have a baseline. Now every week instead of saying “The trade called me and said it’s going to be 14 weeks late,” you can say “We all went through this, we did the research, we knew what the supply chains were doing at the time but it’s fluctuated. When I change this buffer duration or delivery duration from 14 weeks to 16, not only do you have an Excel template that tracks these things and proves we went from the best knowledge and that it changed, but also it’s visible to the owner.”

Q: What are the four emergency actions we need to take right now?

One: Procurement log on every project. Two: Weekly procurement meeting with the entire project management team every project. Three: Every day the teams working in a 15-minute standup huddle removing roadblocks from the field where procurement is a major issue, major item, major topic. Four: Takt plan and procurement log set up no later than the end of schematic design so we can figure out our strategy in preconstruction and set up the rest of the job for success. This is emergency status. Sit in your room with leadership and find a scalable method where you can ensure that in two weeks every project has those as tools.

On we go.